While the nation's unemployed were able to keep things together for a little while, with the first round of supplemental unemployment benefits having run out months ago, and with some still waiting on the half-size supplement that's due to run out in six weeks, Americans who are out of work are starting to cut back on spending, which could add yet one more challenge to getting the economy back on track, reported the Wall Street Journal. While, so far, we have not seen a broad economywide plunge in spending, other data indicates that the laid off are spending less than they were just a few months back. Debit and credit card data, for instance, shows that the unemployed since July have cut spending on grocery, apparel and restaurant purchases. Among all three, spending has dropped from a July 28 figure of 30 percent more than on Jan. 7 to a figure of 15 percent more than that date on Sept. 8, a 50 percent decline. The Journal noted that economists expect to see further reductions as the month wears on, which will hurt consumer spending, a key driver of the economy.

This tracks with a recent study that pointed out that unemployment benefits were not only  keeping laid off employees afloat but also bolstering the businesses where the unemployed spent their benefits: The researchers found that, in general, when you give unemployed people money, they will spend it, and if you take that money away, they won't. Specifically, the paper says that cutting the supplement from $600 to $400 would serve to reduce local spending by 12 percent; cutting it to $200 would reduce local spending by 28 percent; and getting rid of the supplement entirely would reduce local spending by 44 percent.

The researchers said that their results indicate that the unemployment supplement was having a stimulative effect on the U.S. economy, serving to mitigate at least some of the economic damage done by the pandemic.